House of Commons Hansard Debates for 16 Apr 1991

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"that the successor company shall take such steps as are necessary to preserve the independence of the British Technology Group to enable it to maintain and extend its services in the field of technology transfer."

The wording of amendment No. 6 follows the "three i's" definition given by the chairman of BTG, which has been quoted extensively both on Second Reading and in Committee--"independence, impartiality and integrity". It calls for the Secretary of State not to be able to pass on BTG through this enabling Bill without setting out how he will guarantee those qualities in the future. Those conditions will secure BTG's safety.

It is, I think, accepted that even BTG's current management do not consider the existing assurances and guarantees go sufficiently far. I do not believe that I am betraying any secrets in saying that new clause 1 was tabled with the support of the management. It is they who have argued over the years that BTG should change its status and have come out in favour of its transfer from what can be broadly defined as the public sector to the private sector ; but they, too, want assurances. If they--the people who have been pushing hardest for the change--are not happy, others can reasonably be assumed to be even less happy.

Sir Gerard Vaughan : It is no use our country's having inventions if they cannot then be marketed to its benefit. It would be a tragedy if inventors lost confidence in the new body and did not make their inventions available to it.

Mr. Hughes : The hon. Gentleman is quite right. Some of the company's employees--who include constituents of mine--fear that the wrong sort of sale, without guarantees, would have two effects. First, it would not protect the public interest ; and, secondly, it would not gain the confidence of the universities, which at present take their ideas to the company in the hope that they will be developed confidentially and intelligently so that they can be exploited to best effect. They will not go there if they believe that BTG will be bought. I am not against the idea of an international interest in it. A 10 per cent. American, Japanese or European Community shareholding might be entirely appropriate. Let us, however, consider a Japanese takeover of BTG. It is highly unlikely that many of those who currently confide the development of their invention to BTG and who come from a British academic background would continue to want to do so. They would understand that their invention would not be used, as it is now, for development at home of things that they want to develop at home. That is a practical concern. Therefore, the hon. Gentleman was right. That concern is shared profoundly by employees who are troubled by the proposals. We need to take account of their troubles and concerns.

Amendment No. 6 adopts the chairman's language. I ask the Minister to be much clearer than he was in Committee, where he said : "Anxieties about the effect of privatisation on the 3i are important. The BTG chairman, Sir Colin Barker, stressed the importance of retaining 3i and several Opposition Members expressed similar anxieties. They want the Bill to include measures to safeguard the 3i after privatisation. The Government will take those anxieties into account when deciding the form of privatisation and whether safeguards are necessary in the articles or the agreement of sale."

That was the point made by the right hon. Member for Morley and Leeds, South (Mr. Rees). The Minister continued :

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"Other factors will be taken into account in determining the best route for privatisation."--[ Official Report, Standing Committee G, 7 March 1991 ; c. 150.]

However, the Minister refused to say specifically that he would give any guarantees or undertakings. To take those anxieties into account does not reveal the Government's hand. Independence has not been guaranteed.

The Minister was also asked to deal with whether it would be possible for a single purchaser to take over BTG lock, stock and barrel. However, he did not adequately do so. That question was put simply by the hon. Member for Liverpool, West Derby (Mr. Wareing) : "I was objecting to the idea of one company buying out the BTG and using its resources solely for its own interest. The Minister said that that was a possibility."

The Minister replied :

"It is a possibility."--[ Official Report, Standing Committee G, 28 February 1991 ; c. 97.]

That should not be. Those who were not members of the Committee or who have not read the reports of the debates may not be aware that the Government accept that a wholesale acquisition is a possibility. That is unacceptable not just to those who were the progenitors of BTG and brought it into being in the 1940s, or to those who kept it in being during the 1980s, but to all those who are interested in BTG. Such an unconditional possibility is unacceptable to them. If such a sell-out is possible, the conclusion must be that impartiality will be impossible. If a large or a monopoly shareholder decided not to accept or develop products if the new inventions threatened their market share in goods that they already produce, there would be no independence. If BTG were to be sold in an uncontrolled manner, without any limits on the size of shareholdings, or on the level of overseas shareholdings, the management's motivation would be affected. It would be much more likely to be motivated by the need to meet shareholders' demands for profits, not excellence.

The danger is that patents will be sold off to the highest bidder. That may be in our short-term commercial interests, but it would do no good to our long-term commercial interests. Shareholders could cream off the profits instead of making sure that we develop patents.

In conclusion, I ask the Minister the following questions. Will he tell the House unequivocally that he has no intention of selling BTG to the highest bidder? Can he assure us that that will not be possible? Will he tell us unequivocally that there will not be an overseas monopoly of shares in BTG? Will he tell us unequivocally that he intends to ensure, through the articles of association, that BTG will have a duty to consider all patents brought to it in an impartial manner, uninfluenced by the business interests of the shareholders? Will he tell us unequivocally that, in the articles of association, BTG will not have as a business objective the selling of patents for short-term profits rather than preserving the long- term interests of current and future patent holders and licensees? Lastly, will he tell us unequivocally that BTG will be required, if and when it is privatised, rigorously to defend the patents and licences that it has built up as part of its portfolio over the years of its success? We need some assurances and if they are not forthcoming we shall have to register our dissatisfaction.

I have spoken in a non-partisan way as someone who has been aware of the benefit of BTG for all the years that

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I have been Member of Parliament for Southwark and Bermondsey, not just because it is based in my constituency but because it is a key scientific resource. I hope that the message is clear across the House.

If the Minister can help us today, he will get far less of a rough ride from the other place. If he does not help us today, he must not underestimate that the other place may give him a very hard time. I have no wish to make the Minister's summer difficult or unpleasant, but I do not want him to be dogmatic about the BTG. There are ways of protecting its interests. If that is achieved none of us will be dogmatic about it, but if that does not happen we will have to stand firm and say that the Government are not being honest or straightforward and that they are not looking after the nation's interests as they should.

Dr. Hampson : It is worth recording officially that today is remarkable in one essential respect. This is the first privatisation that the Government have undertaken that the Labour party has not opposed. The amendments do not object to the privatisation. Their purpose is merely to ensure that the end product satisfies a common purpose.

Dr. Jeremy Bray (Motherwell, South) : I hate to disabuse the hon. Gentleman, but we voted against the Second Reading and, subject to what the Minister has to say, no doubt we shall vote against the Third Reading. We have steadily expressed our opposition to the Bill throughout. Certainly within the framework of Government policy we seek to improve the Bill as far as it can be improved.

Dr. Hampson : That just goes to show what a lot of charlatans the Opposition are. Anyone who has read what BTG has stated and particularly what the chief executive wrote in the Observer in March would have no argument against the Bill. When one talks to Opposition Members, they accept its validity. I thought that the Labour party had basically accepted five or six central points.

Dr. Moonie : Does the hon. Gentleman genuinely believe that the chief executive of the British Technology Group has only the good interests of the company at heart and not his own?

Dr. Hampson : That is one of the great giveaways of all time. I always thought that the Labour party was advocating that management should look after the interests of the company and its work force. Here we are saying that the man who is closest to the coal face, if one can use a Labour phrase, does not know what is in the best interests of the company. Since when did the Government know what are the best interests of the company?

One of the problems in this country has been that we have had no effective means of technology transfer between the originators in the academic world and delivery in business. We have been edging forward out of the grotesque bureaucratic apparatus which the Labour party supported and, from what we have just heard, seems still to support, into a much more flexible instrument. It is an instrument that is very successful in generating returns for the universities--£13 million a year. It is seen by the universities as one of the most effective means of promoting their inventions. As the universities themselves are not against this privatisation, it is extraordinary that the Labour party opposes it. But Labour has managed to get itself ideologically cocooned ; it is simply against privatisation in principle, no matter what the context.

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Dr. Moonie : I hoped that the hon. Gentleman, who is one of the more intelligent Members on the Government Back Benches, would be able to recognise the difference between making the best of a bad job and supporting a principle.

4.30 pm

Dr. Hampson : Now the hon. Gentleman is changing his tune. It is significant that there are hardly more than four Labour Members in the Chamber to take part in the great defence of their principle. The Opposition recognise that the future of this operation depends on its being in the private sector. The company itself says so. If it is to remain the world's leading technology transfer company, it will, they say, have to be "given the freedom and the stimulus of the private sector". If it is to succeed, it cannot be parochial. It must not be restricted within the bounds of an island off the greater part of the continent, and isolated from the rest of the world. This must be a global operation. It is vital that it has the critical mass which will give it the investment potential that is necessary if it is to draw on innovative capacity around the world, for the benefit of this country.

Governments will set limits on its operations, and have to approve board members and executives. Is the hon. Gentleman saying that the organisation should have to exist in a critical and competitive world with one hand tied behind its back ? Is he saying that it should be kept in a financial straitjacket ?

The Opposition do not seem to realise what has been happening in recent years. Today, the Treasury is more short term in its thinking than is any organisation in the City. The hon. Gentleman should take the trouble to read some of the remarks of the chief executive of BTG. Two years ago, on the orders of the Treasury, it had to pay dividends amounting to £8.6 million, despite the fact that its after-tax profit was £5.2 million. [Interruption.] The hon. Gentleman, instead of trying to intervene ideologically, should listen. How does he justify the fact that a company that he wants to succeed had to pay dividends amounting to £8.6 million, although its after-tax profit was £5.2 million ? That is a means of preventing this organisation from backing British innovation and from succeeding in technology transfer.

Dr. Moonie : The hon. Gentleman has referred to a Treasury straitjacket. But Treasury straitjackets are not immutable ; they can be changed. The hon. Gentleman says that the company has one hand tied behind its back. But this is the world's most successful technology transfer organisation. No organisation in any other country comes anywhere near it. It seems to have done rather well in the straitjacket that the Treasury has provided for it. On the question of management, surely the hon. Gentleman is aware that a survey of the views of all the employees of BTG showed that an overwhelming majority were opposed to the principle and practice of privatisation.

Dr. Hampson : The hon. Gentleman has just given the game away totally. Only five minutes ago he was condemning the management ; now he is praising it for having done a brilliant job in the straitjacket of the Treasury. He knows that the company will prosper without that straitjacket.

This debate is really about protecting intellectual property and the people who create it--the innovators.

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Every one of the amendments that we are debating is, in a sense, flawed. We have all fallen into the trap of talking about the articles of the successor company. The successor company will be a Government company run by civil servants, and it may last a long or short time. The amendments' aim is to probe the Government's intention for the private operation, not the successor company, which is a technical term for the interim period before the company is sold.

I hope that we are seeking not blanket condemnation of the principle of privatisation but firm guarantees from my hon. Friend the Minister on the structure of the private company that will emerge. If he can give those guarantees, new clause 1 and new clause 5 become redundant. We shall have to wait and see whether my hon. Friend can go beyond what he said in Committee.

Dr. Bray : New clause 1 is not as defective as the hon. Gentleman suggests because clause 15 defines the successor company as "the company nominated for the purposes of section 1" ; and under clause 1 the successor company is the company that "the Secretary of State may by order appoint all the property, rights and liabilities to".

Only the sale of shares in the successor company constitutes the act of privatisation. The successor company, surely, continues, so new clause 5 is in order.

Dr. Hampson : There is a nice legal dispute about what the amendment means, but I ask my hon. Friend the Minister to clarify that. We are trying to ensure that the final structure of the company meets valid objectives, the critical one being that the British Technology Group is our primary instrument for transferring bright ideas and breakthroughs to the private sector. It must therefore remain independent and in no circumstances must it fall into foreign ownership.

I might as well jump my own gun and say that the most important point that my hon. Friend the Minister must clarify concerns the prospect of a golden share held by the Government. The model was water privatisation, where we established a five-year golden share, which must be a minimum period to prevent asset stripping, especially foreign asset stripping.

Dr. Bray rose --

Dr. Hampson : I shall give way again to the hon. Member for Motherwell, South (Dr. Bray), but my brief intervention is becoming a summing up. I have replied to about six interventions. The Labour party is so sensitive on this issue that it cannot do other than constantly defend its position.

Dr. Bray : The hon. Gentleman is making a useful speech. He said that he would like to see a golden share. Will he support amendment No. 2, which creates such a golden share for the precise period that he specified?

Dr. Hampson : I shall wait to hear what my hon. Friend the Minister says. I am always hesitant to support amendments tabled by the Labour party ; I am sure that its amendment is as inadequately drafted as amendments that I have tabled. I have long said that a golden share is the only sensible guarantee of avoiding asset stripping. Mr. Simon Hughes rose --

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Dr. Hampson : I shall give way, but it must be for the last time as this is a short debate.

Mr. Hughes : Does the hon. Gentleman accept that the logic of his general principle--that we must protect this important mechanism--will not be sustained by the mechanism that he proposes? A golden share kept for, say, five years places as much uncertainty in the mind of the prospective inventor who wants to use BTG, because after five years there may be no golden share. We need a mechanism and guarantees that the structure will be circumscribed in certain respects. It will be in the private sector, but in these respects we shall have control over it. Five years is short term, with the risk that it all gets lost in five years' time. That will not provide the confidence that is one of the prerequisites for the operation's necessary success.

Dr. Hampson : I was coming to that point because I agree that short termism is a problem, and I have commented on that in one context already. It also applies in the sense that five years means that it will come, probably, in the political cycle. A body that earns perhaps 70 per cent. of its income abroad and has to deal with private companies and private enterprise in, say, Japan will have problems if we are not careful, with a Labour Government potentially always hovering around threatening to turn it into some nasty bureaucratic stranglehold operation. No national enterprise will ever be able to draw on the property rights of other, private companies. We have seen a couple of major examples already with BTG. A golden share is essential in the transitional period and as the major protection against asset stripping, which may be by a British company ; and may not be foreign. But I fear that the major Japanese conglomerates, with their huge banking resources and industrial strength, would thrive on the innovative power that BTG generates. So there has to be a ceiling, and this is the third point that I want to ask my hon. Friend to clarify. I want him to go beyond what he said in Committee and to say that there will be a ceiling on the equity holding of any foreign operation.

I endorse entirely what has been said by my hon. Friend the Member for Reading, East (Sir G. Vaughan) in moving the new clause. We are primarily interested in the independance of this operation. The consortium idea is a very attractive one because I believe that the universities are a critical force that has to be recognised. It is almost irrelevant whether they have one, two or more members on the board. It is the blocking stake in the operation overall that is important. I hope that they can generate the resources. We have to look quite inventively, as some operations in the United States have done, at how private industrial business capital can go through the university world to lock the universities into a major participating element of this company--a 20 per cent. stake--a blocking stake of some kind, to keep the universities as a central player in the operation. Above all, I hope that what will emerge from what my hon. Friend says today is the recognition that a Major society, if I can coin a phrase, if it is to be an innovative society, must ensure that this form of partnership between the academic, innovating world and the private capitalist world, which is the dynamo of the world economy, thrives and succeeds. I believe that what we are doing today is the right way forward.

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Mr. Mike Watson (Glasgow, Central) : It was stated on Second Reading and on a number of occasions in Committee that there is no need for the privatisation of the British Technology Group. I do not intend to go over that ground again, but one point that should be mentioned is that, if and when the BTG is privatised, the United Kingdom will be the only major industrial nation that will not provide backing for technology transfer. I believe that we should learn a lesson from some of our industrial competitors, such as the United States, France and Japan, all of which have industrial records that are considerably better than ours and all of which have state owned and controlled technology transfer companies which perform effectively.

I find it strange that the Minister and his colleagues have found little good to say on behalf of BTG and the job it is doing. We know that it is profitable and effective and that it is regarded highly by universities, research institutions, and so forth. Yet the Government are determined to force it into the private sector irrespective, apparently, of the effect that that will have on its effectiveness. 4.45 pm

Some comments of the hon. Member for Leeds, North-West (Dr. Hampson) about BTG were rather patronising. He talked of the Opposition's approach to BTG and referred to the so-called straitjacket within which he believed it was currently operating. There is little evidence of that, despite comments which the senior staff of BTG have made and which were repeated in Committee. It seems clear that the body is effective and ought to be allowed to continue in that way. However, we must be realistic and assume that the Bill will eventually become law and that BTG will be privatised. On that assumption, the question of safeguards, which is referred to particularly in new clause 1, is important.

The hon. Member for Bedfordshire, North (Sir T. Skeet) raised the question of assets. He talked of the prime assets of the company as being the staff. I would not disagree, but I thought that he was a bit restrictive. He talked of senior staff and of investment, knowledge, research, expertise, and so forth. There are 188 staff at the British Technology Group, and I think it is wrong to say that we should be absolutely certain that some of those staff stay with the group when it is privatised while others are of less importance. There is a contribution of expertise from the staff on a wider scale that should be valued and recognised.

Although staff are clearly prime assets of any organisation, I am also concerned--and this is not the first time that I have said so during the stages of this Bill--about the question of patents owned by BTG and what will happen to them subsequent to privatisation. I spoke on Second Reading on 12 February and made similar comments, which drew an intervention from the hon. Member for Bedfordshire, North, who said that he saw no problem with regard to patents. I raised the question again in Committee, addressing my remarks to the Under-Secretary, and said that I had had no assurances from him in his summing up on Second Reading and hoped that I would have some assurances on that later occasion.

The Under-Secretary said that the question of patents was one of the important points which the Government wished to draw out from the debate--I use his words. But it was never successfully drawn out from the debate in

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Committee and there is no evidence as yet that the hon. Gentleman or any of his colleagues is likely to give it any emphasis at this stage of the Bill.

It is very important that the question of patents is addressed and that assurances are given to universities and other research bodies. Many individuals who work within unversities need assurances about what will happen under the new ownership of the group. I hope that the Under- Secretary is listening when I ask again for such assurances. I see that he is not listening, but perhaps the message will eventually get through to him that the people responsible for inventions need assurances about patents.

One reason why we need such assurances concerns how patents might be defended following the sale of BTG. The fact that BTG pursued the Pentagon recently in a case that lasted for a considerable time and resulted in payments of some £6 million being made to BTG and the owners of the patents concerned has rightly received a lot of publicity. That is not a typical example, but BTG has been vigorous in defending the patents within its control and we need assurances that that will continue. Legal action is, of necessity, costly, particularly lengthy cases, often against powerful

predators--multinational corporations perhaps--and these may not be attractive to the new owners of BTG.

I am particularly concerned about comments made by Dr. Ian Young, the manager of research on nuclear magnetic resonance, which has been a major earner for the British Technology Group. He said that he was concerned about overseas patent infringers. What would happen if the new owners of the group were faced with a similar situation in terms of one of the existing patents, or indeed a patent which came along subsequent to privatisation, and the estimation was made by the new owners that the cost of litigation in defending that patent could not be justified for any number of reasons, the least of which might be financial?

Some safeguard has to be written into the Bill. There is no safeguard whatsoever, and I am particularly concerned that this matter is addressed and that the Under-Secretary gives us the Government's views about how this problem may be dealt with after privatisation.

The last point that I want to mention was covered by the hon. Member for Southwark and Bermondsey (Mr. Hughes), for whom I have great respect. He is the Member who represents me through my London residence ; therefore, I want to keep in his good books. I also have great respect for his knowledge of education matters and for his ability to extend his comments over a long period. On occasion that has been of benefit both in Committee and in the House. The hon. Gentleman is not here at the moment, but I should like him to know that I mean those comments kindly ; no doubt his colleague the hon. and learned Member for Montgomery (Mr. Carlile) will pass them on. The hon. Member for Southwark and Bermondsey talked about who might take over BTG when it goes up for sale. He expressed the view, which I wholeheartedly echo, that the highest bidder should not necessarily be successful. That is of great importance.

It is also important that consideration is given to expertise. The hon. Member for Leeds, North-West said towards the end of his contribution that universities might have a role to play in bidding for the British Technology Group. I hope that that possibility comes to fruition.

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Dr. Hampson : I should like to correct the hon. Gentleman. I did not say that the universities should bid for BTG because that would be a gross waste of their resources ; I do not even know how they would do it. However, I think that they have a part to play in a consortium arrangement in which they would have a blocking element, if for no other reason than that I do not want the ownership of BTG to be vested in an industrial corporation which would use the intellectual property rights generated in this country to block universities from commercial activity just because they were in competition with things that the company was already doing. I think that the universities have to be built into the system to look after the interests of the innovators, but I do not want the universities to own the company.

Mr. Watson : I value that qualification of the hon. Gentleman's remarks ; I had misinterpreted what he said. The argument as to whether the universities and research councils should have representation on the board of the new company, by whomsoever it is owned, was addressed in Committee. Such suggestions came from the Opposition and were rejected by the Government. I share the concern of the Member for Leeds, North-West and hope that something will come of it.

I was addressing my remarks to the possibility that some universities may form a consortium with research organisations and foundations, possibly involving British Technology Group managers and employees, to bid for the company. That would not mean that it would be owned by the universities, but they would have an input financially and in expertise. It would not necessarily cost the universities a great deal to divert funds which might be used for other purposes at a time when they are being squeezed, but it would mean that there would be a direct input from universities, which would be much more desirable than commercial considerations being brought to bear on BTG which has shown over the years that it can conduct technology transfer in a way which, while being profitable, is not driven by profit as the main motive. It is important to stress that profit need not and should not be the main motive.

There is a great deal of expertise, particularly in universities and research councils, that must be used to ensure that the British Technology Group post-privatisation maintains its role of being effective in technology transfer. If it is run simply as a business proposition, it will have a short life. No hon. Member wants that. If the Government are prepared to take note of the comments of hon. Members on both sides of the House, I think that we will achieve some assurances of university and research council involvement. That is very important for the future development of the British Technology Group.

Mr. Alex Carlile : At one point during the debate we started to descend into the political arena as to whether the British Technology Group should be privatised because privatisation is a good thing or not privatised because it is perceived to be a bad thing. That was a little caricature of a sensitive and mature debate about the nature of the business activities carried out by BTG.

Everyone who has spoken in the debate shares the same sense of purpose that there should be at least a body, whether it is called the British Technology Group or something else, to which British invention can go with

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confidence, knowing that it will be supported not only in the short term but in the long term, that its intellectual property will be nurtured and that it may be nurtured in the national interest, which seems to be not an unreasonable end for which to aim.

The function of the British Technology Group includes securing, where the public interest so requires, the development or exploitation of inventions resulting from public research. That is entirely laudable. Neither on Second Reading nor in the Committee proceedings which I have studied have the Government been able to give satisfactory assurances that the strategic aims of the British Technology Group will continue. It seems possible that in a very short time the assets of the group will be sold to the highest bidder, who may not have our national interest at heart.

Hon. Members have mentioned selling the family silver. In one respect at least there is a danger of giving away rather than selling the family silver. I put to the Minister a point which I hope he will deal with in due course. It relates to the intellectual property of research carried out by or on behalf of the Ministry of Agriculture, Fisheries and Food. It has come to my attention that in February 1987 a confidential internal paper was circulated in the Ministry. It was written by Dr. C. E. Fisher and was entitled :

"Policy and Organisation Study of Exploitation of Intellectual Property in MAFF."

Following the circulation of that paper and discussion on it, there was apparently an agreement that the British Technology Group would handle the exploitation and the export, where appropriate, of the intellectual property of the Ministry of Agriculture, Fisheries and Food. That agreement was marked by a MAFF press release dated 4 January 1990. It was not one of the most howling successes of MAFF's energetic publicity machine as all that it rated was a small piece in one, albeit distinguished, farming journal.

In the light of that, can the Minister tell us whether the British Technology Group will give up that agreement with the Ministry of Agriculture, Fisheries and Food before privatisation, or will it give away in the privatisation all the intellectual property of which it has the advantage arising from the Ministry's activities? If the intellectual property of the Ministry of Agriculture is simply to be given away to whomsoever purchases the group, that will be truly giving away the family silver.

A connected complication arises in relation to the royal botanic gardens at Kew. Since 1984 they have been funded by a grant in aid from the Ministry of Agriculture, Fisheries and Food. As I understand the position, any intellectual property that has arisen from research at Kew is part of the agreement to which I referred earlier. That means that the British Technology Group, under that agreement, owns the intellectual property--or at least holds the rights to it--arising from the world-renowned efforts of the researchers at the royal botanical gardens. For example, the gardens have the largest collection of wild plant seeds in the world, a major resource not only for third world development but for agricultural, horticultural and botanical development throughout the world.

Will the British Technology Group give away those potentially hugely valuable intellectual assets when it is privatised? Will that important piece of public property

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simply be handed over to a private purchaser? Will the Minister answer those questions when he replies to the debate?

5 pm

Dr. Hampson : The British Technology Group will not be giving away those assets if they are properly developed and exploited and become commercially successful. It all comes back to the nature of the company. We are not giving away public sector assets but trying to develop them. I do not mind if public sector inventions are developed by private companies. Does the hon. Gentleman mind?

Mr. Carlile : I have divulged to the House that, as a result of its public service position, the British Technology Group was given valuable assets which it would not have acquired had it not been in such a position. That has not been revealed to the House before and is a well-concealed fact. It should be part of the consideration when the House decides how to vote on the Bill. I suspect that when the matter is debated in another place, it will be an energetic debate led by some university chancellors and others from academic backgrounds, and those considerations will be important when they decide whether the Government have come clean about what is happening.

Is British public service inventiveness being protected? We must bear in mind what has happened in various privatisations. I do not suggest that there has been bad faith in the setting of prices for privatisation deals, although others might do so. It is clear with hindsight, at least in market terms, that the private sector has had some extremely good bargains as a result of privatisations. We must therefore have a full understanding of what is being sold. For example, when we are dealing with Ministry of Agriculture, Fisheries and Food intellectual property, which is very much part of the public service, should not the public service gain from exploiting that intellectual property? The public service and the Government are entitled to the profits of that exploitation.

Research is still being carried out, albeit in diminished terms, on behalf of or by the Ministry of Agriculture, Fisheries and Food. What will happen to the intellectual property in that research or research carried out by any other Department? Have the Government thought that through or will they hawk whatever intellectual property exists around the market to see who is the keenest taker? Do they really believe that companies will be prepared to take the long-term view that the British Technology Group has been prepared to take? The issue seems to be clarified by the words in the first new clause, "to preserve the nature of those business activities".

Will the Minister assure us that the type of business activities to which I referred will be preserved as public assets?

Dr. Bray : This useful group of amendments has attracted hon. Members who have a contribution to make to the subject of the Bill. Some of them spoke on Second Reading but were, unfortunately, excluded from the Committee, no doubt by the machinations of Committee selection procedure and the Whips, not to mention the Minister. Had they been members of the Committee, the Bill would have been in rather better shape now, and the future of the British Technology Group would be clearer. The Minister's mind would also be clearer. I doubt

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whether he will be able to shed much light on the Government's plans for the future of BTG, even this evening.

The hon. Members for Reading, East (Sir G. Vaughan), for Leeds, North-West (Dr. Hampson) and for Bedfordshire, North (Sir T. Skeet) have, for a long time, taken great interest in science and technology, research and its application to universities, and the integration of universities' output into industry. Had the Government listened more carefully to their views, not only on the Bill but on other matters over the past 10 years, the economy would be in a better shape today.

The amendments cover a wide range of issues and tackle the problem of BTG's future from a number of different directions. New clause 1 uses the instrument of articles of association, which is a useful but fragile method because articles of association can be amended by a decision of a majority of shareholders and therefore constitute no permanent guarantee of what will happen to the company. The new clause leaves the arrangements to preserve the nature of those business activities to the Minister's judgment and to the action that he deems necessary. New clause 5, in the name of the hon. Member for Southwark and Bermondsey (Mr. Hughes), requires that

"such steps as are necessary to preserve the independence of the British Technology Group"

be taken. That is a somewhat stronger requirement than new clause 1 and does not leave it simply to the Minister's judgment. It is a distinct approach.

Everyone is concerned about continuing to preserve the nature of the business activities of the British Technology Group. That nature is a strategic role in the technology transfer processes of this country.

The Government introduced the Bill without a clear idea of what they wanted to do with BTG or even what its role is, or has been, in the economy and the processes of technology transfer. They introduced it partly out of a desire to remove it from the public sector. If anyone has been doctrinaire on that issue, it has been the Government.

Furthermore, the manner in which the Government have behaved toward BTG in the past 10 years has been disgraceful. They stifled a great deal of management initiative, which led to frustration on the council. Although that led the council to accept the idea of privatisation, it wanted privatisation with sufficient safeguards of the independence, integrity and impartiality of the successor organisation.

Dr. Hampson : About eight years ago, everyone was condemning BTG as being bureaucratic and unsuccessful. We transformed it and it has been more flexible and successful under the present format. The Government stopped it taking part in Alvey and Link only because it is a nationalised body. If the hon. Gentleman had his way, the organisation would be constricted and constrained for ever in that way.

Dr. Bray : The hon. Gentleman claims too much by saying "we" transformed BTG, if he refers to Conservative Members or even the Government. The staff and management of BTG transformed its operations and tightened up consideration of the intellectual property from universities and research councils. The greater concern of pursuing and promoting applications and so on was not the result of Government initiatives but the proper response of BTG. I would not minimise the importance of

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the removal of the monopoly in stimulating BTG. We would not seek to reverse important development. We think that universities and research councils should be free to make whatever arrangements they consider appropriate for the application of the results of their research.

A number of influences have been at work. We certainly welcome the success that BTG has had in transforming itself into an operation that should-- given reasonable luck because it remains risky--continue to be successful commercially. However, as hon. Members have repeatedly said in the debate, the Bill leaves the distinct possibility of the dismemberment, diversion or subversion of BTG. There are no safeguards for BTG's future, and the Government have given no assurances to provide adequate safeguards. BTG's assets could simply be stripped. If one were closing down the operation, the value of the office and the secure income revenue from the existing stock patents would certainly be sufficient to remunerate a substantial bid for BTG. However, the income that is in prospect and the assets in the building and bank deposits are there to facilitate the continuation of BTG in its present business. If that business were abandoned, assets would be available to an asset stripper and there is no safeguard against that under the Bill's provisions or in the sort of commitments that the Minister gave in Committee. We shall listen carefully to the Minister, but he is unlikely to give any more reassuring commitments tonight, so it may prove necessary to press a number of amendments to a Division.

It is not simply a matter of asset stripping. The sort of price that might be bid for BTG is small beer in relation to the value of single pieces of intellectual property. Were BTG fortunate enough to have the patents on Zantac, it would increase BTG's capital value one hundredfold. If there were reason to believe that a particular drug that BTG had patented on behalf of a client would lead to a large revenue, a drug company seeking to gain control of that patent could almost write off the purchase cost of BTG in its petty cash. In the high risk business about which we are talking, bidding for a company the size of BTG would not be a major consideration. The business is high risk and any such contingency is necessarily speculative, but that is the nature of the game in which we are engaged. It is because it is so speculative that the Opposition believe that BTG would, most sensibly, continue within the public sector where it can afford to take risks of the size incurred in such a game.

A further possibility is that, apart from the single, large, dramatic piece of intellectual property, some interests--most obviously, one or more Japanese companies--could seek to gain privileged access to a wide stream of intellectual know-how from British universities and research institutes. I was interested to find that the rate of investment by Japanese companies in new research facilities in this country was being closely followed, not only by people in this country, but by our partners in the European Community who, on a lesser scale than us, have had the same experience. I am told that there are a dozen Japanese research institutes, for example, in the Cambridge and Surrey university science parks, and near to Oxford, strategically placed to tap into the general stream of the British scientific tradition. In one sense, I say, "good luck to them", but if one adds to that factor the sort of facilities and lines of communication, and the continuing role in the transition that BTG offers, the Government's naivety is rampantly stupid. Nothing that

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the Government have said has dismissed such a possibility. There are ways to safeguard against such a threat, and the amendments would prevent such a development, but the Government have steadily resisted such proposals.

A further consideration is that BTG management, particularly the chairman, has rightly stressed the necessity for the continuation of BTG's business and the need to maintain its independence, impartiality and integrity. Independence is necessary in that an industrial enterprise might seek to gain control of BTG for specific purposes relating to a particular sphere of business. Impartiality is necessary in that BTG must plainly properly represent the interests of the inventor, developer, applyer and exploiter. Integrity is necessary in that, in the sort of negotiations that take place when concluding a contract on intellectual property, it is necessary to go into much detail, not only on the technical and scientific aspects, but on the economic, business, market and financial aspects of the deal. That is a matter on which, at present, parties negotiating with BTG can rely on its total integrity to safeguard the confidentiality of their interests.

5.15 pm

No formal undertaking has been given to the House, nor was such an assurance given by Ministers in Committee. Furthermore, no formal undertakings have been given by the Minister to BTG's council in reply to the representations that it has made in that respect. The Government have shown an extraordinarily wooden attitude. They must have some reason for failing to give comfort and reassurance, but what is it? I suspect that it has two parts. First, the Government totally fail to understand BTG's role and, secondly, they simply want to maximise BTG's selling price, perhaps under pressure from the Treasury, which plainly has a duty to urge the importance of getting a decent price.

The Government's failure to understand BTG's strategic role was amply evidenced on Second Reading when Ministers compared the size of BTG's investment in research and development with total United Kingdom research and development and Government expenditure on research and development. However, that is not BTG's business. It is not primarily a financier of research and development, basic, applied or industrial, but primarily a technological transfer organisation operating at the stage of patenting and licensing, and when research immediately surrounding the protection of the intellectual property of new inventions is developed and applied. That is necessarily a small part of overall expenditure by Government or industry, but it is a strategic part, and it is that strategic role that the Government have failed to grasp.

We must ask where we are in relation to that background. Hon. Members have talked about the need, indeed the possibility, of securing the participation of universities and research councils in BTG's future functioning and control. Only yesterday, the Minister met representatives of the Committee of Vice-Chancellors and Principals and he has not yet replied to a letter from the British Technology Group seeking his agreement to its putting together a consortium bid. It should be remembered that, since Second Reading, we have been

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